WASHINGTON”•The US job market is at its strongest since the start of the financial crisis and there are signs workers will start to see the benefits in their paychecks, Federal Reserve Chair Janet Yellen said Monday.
In the first speech by a Fed official since the central bank raised interest rates last week for only the second time in a decade, Yellen was moderately optimistic about job prospects, even though the economy is growing slowly.
She told graduates of the University of Baltimore that “after years of a slow economic recovery, you are entering the strongest job market in nearly a decade.”
The unemployment rate, now at 4.6 percent, “is near what it was before the recession,” she said.
Yellen added that job creation is continuing at a steady pace and there are also indications that wage growth is rising and living standards are improving for most families.
However, she said, “Challenges do remain. The economy is growing more slowly than in past recoveries, and productivity growth, which is a major influence on wages, has been disappointing.”
The lack of wage growth despite the low unemployment rate and the longest streak of job growth on record”•81 consecutive months of job creation”•has posed a conundrum for the Fed and contributed to the decision to hold off on raising interest rates until now.
Fed officials expect three rate increases next year.
Yellen both lauded a strong labor market and said degrees will help young people to take advantage of the opportunities the modern world presents.
“While globalization will likely continue and technology will continue to advance, we don’t know how fast the economy will grow, what new technologies will be developed, or how quickly and consistently employment will expand,” Yellen said. “Success will continue to be tied to education, in part because a good education enhances one’s ability to adapt to a changing economy.”
The jobless rate for those with a bachelor’s degree or higher is down to 2.3 percent, the lowest since 2008. While overall unemployment in the US is twice that, at 4.6 percent, it’s at its lowest in more than nine years.
“This is a level that has been associated with good job opportunities,” Yellen said.